Adam J. Fein: Customer self-service comes to wholesale distribution

Self-service is one of four major trends from Facing the Forces of Change: The Road to Opportunity report (available at www.nawpubs.org), the wholesale distribution industry’s leading future trends study.

The Internet is enabling a new, more robust definition of self-service. Online ordering is just one aspect of a far-reaching shift by customers from “do it for me” to “do it yourself.” Customers are trying to do more in less time.  They gravitate toward self-service when they can perform activities that bring then added value, such as becoming better informed about product options online regardless of their distributors’ line card, or simply to save time, such as checking order status online instead of placing a call. 

Our research for Facing the Forces of Change: The Road to Opportunity found that customers will increasingly want to:

• Communicate with a sales rep via e-mail.
• Gather product information and specifications from a website.
• Obtain product prices and availability information online.
• Access post-sales technical support information online.
• Review their purchasing history online.

Distributors no longer have a lock on information needed by customers to make purchasing and sourcing decisions, since manufacturers and other online sources will increasingly make such information readily available. As a result, the salesforce’s perceived value in educating customers about new products and in-use applications will be significantly eroded.  Some customers will simply not want to pay the margin required to support an outside salesforce.  

Here are three actions that wholesale distribution executives can take to address this trend:

1.      Offer self-service options to customers.

Today, the most intriguing self-service tools with application to wholesale distribution are being pioneered in retail markets.

• Online account information provides the most basic self-service functionality. Product payment, order placement, order tracking and delivery planning are all activities that customers will be increasingly performing for themselves. Customers will have more control to service their own account and handle routine inquiries online.
• Self-help options provide customers with access to the same information databases used by your internal sales and customer-service representatives. Static, text-based knowledge bases are not always the best solution for customers, especially those with complex service or support needs. These tools will be used less frequently because customers will simply find it easier to phone and ask for help.
• Connectivity refers to a set of tools that enables customers to interact with employees of your company in new and different ways. For example, many smaller distributors still do not provide a corporate e-mail account for all their employees. This position will be hard to maintain given the ever-dropping costs of the technology and increasing customer expectations.

2.      Unblock the flow of customer information within your company.

Customers will expect their distributor suppliers to treat them in a consistent, integrated manner across numerous points of contact in your organization. If customers use both conventional and online methods to communicate with you, they will not want to repeat themselves just because different parts of your organization do not share information.

Distribution executives should review their own company’s activities throughout a customer’s buying process.  Common inefficiencies for distributors include:

• No linkage between your online presence and inside sales, forcing customers to repeat themselves when interacting with your company.
• Duplicate steps, such as a salesperson writing up an order and sending it to order processing for re-keying.
• Activities that do not add value to your customer, such as needing to verify orders with the warehouse before shipping.

3.      Encourage profitable customer buying behavior

Distribution executives should also understand how they can harness customer self service to boost profitability.  Self-service can be a cost-effective alternative for customers whose level of spend does not justify labor-intensive interactions. 

Customers who place multiple orders each day increase transaction costs and lower profits to an unacceptable level.  Rather than losing the account, show the customer how much they could save by ordering on your company’s website just once a day.  The customer will save time and stop receiving multiple orders and invoices, while your company will be able to lower the costs to serve this customer so that the account can become profitable.

Applying self-service technologies will allow wholesaler-distributors to keep moving on the Road to Opportunity with stronger customer relations, increasing productivity, and improving profitability.